4. (20 pts) Tenn the mountains: essee DOT is evaluating two alternatives for ext

Question

4. (20 pts) Tenn the mountains: essee DOT is evaluating two alternatives for extending a state highway through Route B $30 million $120 million Route A Highway Cost Bridge Cost Tunnel Cost $60 million $40 million Route A navigates around the mountain and requires the construction of several bridges. Route B goes through the mountain and is 10 miles shorter but requires the construction of a tunnel. It is expected that 1,000,000 vehicles per vear will use the highway. Based on an average vehicle operating cost of 48t per mile, the motoring public would save $4.80 per vehicle if TDOT builds the shorter Route B. Use BC analysis with a 6% discount rate to determine which route TDOT should build. Do nothing is not an option. To make the calculations easier, assume n = o.

Explanation / Answer

Total cost in route A= $100 million

total cost in route B= $150 million

savings in route B = 1000000*48/1000= $48000

SAVINGS by monitering = 100000*4.8= 4.8 millions

total saving 4.8+0.48 = $4.96 million /year

hence route B will be better option

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.